Suppose that the S&P 500, with a beta of 1.0, has an expected return of 14% and T-bills provide a risk-free return of 5%.

a.

What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (i) 0; (ii) .25; (iii) .50; (iv) .75; (v) 1.0? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.)

		Expected return			Beta
(i)	0		%
(ii)	.25		%
(iii)	.50		%
(iv)	.75		%
(v)	1.0		%

b.	How does expected return vary with beta? (Do not round intermediate calculations.)

The expected return (Click to select) increases decreases by % for a one unit increase in beta.